GraniteShares to Augment Leverage on Single-Stock ETFs in the US

William Rhind, the Founder and CEO of GraniteShares, has made a strategic decision to increase the leverage offered on the company's array of single-stock exchange-traded funds (ETFs) within the US market. This move, announced in a recent filing with the Securities and Exchange Commission, is aimed at enabling investors to intensify their investment positions on the daily price shifts of certain highly traded stocks.

Leverage Boost Coming in 2024

Starting January 22, 2024, the leverage on most single-stock ETFs by GraniteShares is set to rise to 200%. This means that, for ETFs tracking stocks with high volatility like Tesla and Nvidia, the leverages will be increased by 0.25 to 0.50 percentage points. This marks a significant increase from the current leverage that ranges between 1.25x to 1.75x, or 125% to 175% of the daily movements in the price of shares.

The Appeal of Leverage in Trading

Leveraged and inverse single-stock ETFs were first approved in July 2022 and have since been a tool for traders speculating on the price movements of volatile stocks. These financial products are designed to offer investors a way to capitalize on stock price movements over a short period, such as a day, particularly attractive surrounding corporate earnings announcements or significant news releases.

The Challenges of Single-Stock ETFs

Although the idea of single-stock ETFs is innovative, not all heavily traded stocks are suitable candidates for these products. Todd Sohn, an ETF analyst, mentioned some initial offerings of single-stock ETFs garnered little interest and had to be closed shortly after their launch due to lack of trading activity.

Still, GraniteShares is optimistic that increased leverage could reignite interest in certain ETFs that have not attracted significant trading volumes or have not launched yet. With larger bets possible, the single-stock ETFs might gain traction among investors eager for higher-stakes trading opportunities.

The Leading GraniteShares ETFs

Currently, the most notable ETF by GraniteShares is the 1.5x Long NVDA Daily ETF, with approximately $253 million in assets and betting on the performance of Nvidia. In contrast, the 1.25x Short TSLA Daily ETF, a bet against Tesla's stock, only holds assets of $1.5 million.

GraniteShares, ETFs, Leverage